Lesson 6: Banking

By and large, banks are for chumps.

With a traditional bank, if you overdraft your checking account, you can expect to be hit with fees ranging from $19 to $39. With their credit cards, late fees or overdraft fees range from $25 to $39, or even more, even if only a day late or a dollar over your credit limit. And what do they give you on your savings account? 0.25% to 0.50% interest. A stinking half a percent.

For checking, auto loans, and credit cards, Credit Unions are the far better deal. And in recent years, they've really opened themselves up to most people in the community, rather than specialized groups. Because they are essentially a co-op, they do not charge high fees like banks do, and generally offer better interest rates on credit cards and loans. My credit union charges me $2 for an overdraft on my checking, and doesn't charge late fees on my credit card, unless I'm really late, which I've never been. My monthly checking service charge is $3 when I don't maintain an average balance of X dollars, but usually that's low enough that I rarely get charged that service fee.

To find a credit union close to you, go to the National Credit Union locator.

A newcomer is online banks. They're great for high interest savings or CDs, but that's about it. They link to your checking account to move funds in or out. A high interest savings account at an online bank is a good place to keep your emergency fund.

For traditional banking services, join a credit union. For savings, go to an online bank. For mortgages and loans, go to a mortgage broker, lending internet sites like Lending.com or eloan.com, and your local Credit Union.

I can't think of a single reason why I'd want to go to a traditional bank.